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Gold Surge Could Continue With Second Virus Wave
Recently, there has been some optimism about the prospect of a fairly quick recovery from the pandemic. Still, even while the most optimistic among us are looking ahead, others have their eyes cast behind us to see if another virus wave may, in fact, be gaining on the country.
It appears that just might be happening.
Public health officials have said all along that the COVID-19 pandemic could be with us for some time. Sure enough, as lockdowns end, we’re hearing that the number of coronavirus infections is back on the rise. According to a Johns Hopkins virus tracker, new COVID-19 coronavirus cases are rising in more than 20 states. There’s an increase in new infections in states such as Texas, Florida and others where restrictions were recently relaxed. The fear is that this jump could prompt the return of economy-stifling lockdowns.
Reports of a new outbreak in Beijing are stoking fears that we’re a long way from containing COVID-19. Fair or not, China is seen now as a sort of bellwether regarding the COVID-19 threat globally. News of another outbreak from Beijing has provoked renewed anxiety about the virus around the world.
Robert Carnell of Dutch multinational financial services giant ING acknowledges the very real threat of a second virus wave. He said aloud what no one really wants to hear: “If, globally, we are still in wave 1, then it is possible that without a vaccine, the big wave is still lying out there somewhere waiting to hit.”
So what would a second virus wave mean for gold? According to one analyst, it means 1,800 dollars per ounce will be the next meaningful price point reached by the metal. Should that happen, there’s a strong belief it could move past its all-time record.
Analyst: 1,800-Dollar Gold Is Next “Psychologically Important” Price Level
Han Tan of FX Empire notes something important about gold’s recent price trend that casual observers may have missed: In just a couple of weeks, gold could realize its 7th consecutive quarterly gain.
It seems reasonable to think it will reach that milestone with little difficulty. At the end of March, the spot price of gold was just above 1,600 dollars per ounce. It is presently at 1,733 dollars per ounce.
Tan suggests the persistence of the COVID-19 coronavirus will fuel the continued upward trend. He also points to the current application of unprecedented monetary policy as another catalyst of higher possible gold prices.
Tan sees 1,800 dollars per ounce as the next “psychologically important” price level for gold amid its current strengthening. And he believes it’s a second wave of COVID-19 that will push gold to that price:
Should signs of a second wave of Covid-19 cases worldwide become more prominent, that could be the catalyst for gold prices reaching the psychologically-important $1800 level for the first time since 2012.
Gold also is enjoying more than just the wind from COVID-19 at its back. In an Augusta blog article published two weeks ago, I noted the opinion of some experts that higher gold prices also could be fueled by ongoing civil unrest across the nation, as well as a recent souring of already-sour U.S.-China relations.
Conditions Remain Ripe for Gold to Eventually Set New Price Record
Is Tan saying 1,800 dollars per ounce is as high as gold will go from here during this current gold bull phase?
No. He’s saying the 1,800-dollar price represents the next significant milestone for the metal and another virus wave – now coming into view – could be the principal reason it’s breached. So, if that happens, then what?
Tan notes gold climbed for 12 consecutive quarters from 2008 to 2011, during the years of the global financial crisis. He also points out gold eventually hit its all-time record price of 1,920 dollars per ounce by the end of that multi-year surge.
Does this mean we could be on track to see that record price matched or even exceeded? It’s difficult to deny the pieces are falling into place for that to happen. Over the last several months, we’ve seen projections of 2,000-dollar gold in the near term from highly credible professional observers. And those predictions were made before the onset of civil unrest and widespread recognition of COVID-19 as a massive economic problem.
Now the coronavirus could treat us to an encore, even as its initial appearance onstage is still unfinished. Some experts have all but assured the public of terrifying economic consequences if a second wave strikes. Hedge fund legend Paul Tudor Jones and economist Mark Zandi of Moody’s Analytics recently said a second virus wave actually could spark a depression.
Gold has risen 14% since the beginning of this year and 30% over the past 12 months. Now a second virus wave is lurking. Prudent retirement savers would do well to consider this: As the pandemic endures, gold still could be at the outset of another remarkable run.